The IRS cannot give taxpayers estimates of how fast it will process quick refund claims being faxed to the agency, but it acknowledged that it may be constrained by resources and the volume of filings.
“It’s really premature to have any estimate on timelines,” Nikole Flax, deputy commissioner, IRS Large Business and International Division, said. “We know that there will be a significant amount of filings that come in through the fax line. [We’re] mindful that these forms are typically processed in 90 days and that taxpayers are obviously anxious to get their refunds, [and we’re] just trying to balance all that.”
Flax spoke on a KPMG LLP webcast April 21.
On April 17 the IRS began accepting via fax quick refund claims related to alternative minimum tax credits and net operating loss deductions stemming from the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). Only claims that are filed on Form 1139, “Corporation Application for Tentative Refund,” or Form 1045, “Application for Tentative Refund,” for individuals, trusts, and estates, qualify for digital transmission.
Those forms were previously accepted only through the mail, but all IRS service centers have closed as a result of the coronavirus pandemic. Practitioners have praised the IRS for its new faxing approach.
The IRS has said that once the claims are received, the procedures for processing them will remain the same despite the new filing method. The Wage and Investment Division will have employees process the forms in the new remote environment, Flax said.
The IRS has updated a frequently asked questions webpage on the quick refund procedures multiple times, and, according to Flax, it will continue to do so as questions arise. Although Flax said more guidance would be coming on tentative refunds for taxpayers with section 965 liabilities, she didn't indicate what that guidance would be or when to expect it, beyond advising practitioners to “be on the lookout.”
The new procedures are a temporary solution that is expected to be implemented until the IRS is “back to normal [with] fuller operations,” Flax said.
According to Flax, the IRS has also seen an increase in filings unrelated to the CARES Act refunds coming through the new fax line, but she said the agency is unable to process those requests.
The FAQs make clear that the new procedures don't apply to Form 4466, “Corporation Application for Quick Refund of Overpayment of Estimated Tax.” Michael Dolan of KPMG asked if the IRS is considering any procedure to improve processing of that form or of Form 1120-X, “Amended U.S. Corporation Income Tax Return.” Flax said the IRS doesn’t have “anything to share at this time” on that subject.
“We continue to hear from taxpayers that it is important that we are able to process the forms in a timely manner, and we are very mindful of that and just trying to balance that with our resource limitations and safety issues for our employees,” Flax said.